Legal issues of general application

Government permission

What government approvals are required for typical project finance transactions? What fees and other charges apply?

All projects or activities that may have an environmental impact can only be executed or modified upon an assessment of such impact, which ends with a resolution that qualifies the project as suitable environmentally. Additionally, some sectoral environmental permits and other sectoral permits are required to develop the project.

Other specific approvals may also be required for particular projects (eg, operation of hazardous and non-hazardous substances requires sanitary approvals, mining projects may require specific mining permits).

No approvals are required from governmental authorities for financings or remittances to or from foreign parties.

Registration of financing

Must any of the financing or project documents be registered or filed with any government authority or otherwise comply with legal formalities to be valid or enforceable?

The financing agreement or the project documents subject to a foreign law do not require any formalities to be valid in Chile, but to be enforceable, the documents must be executed in proper form and be translated into Spanish language.

Arbitration awards

How are international arbitration contractual provisions and awards recognised by local courts? Is the jurisdiction a member of the ICSID Convention or other prominent dispute resolution conventions? Are any types of disputes not arbitrable? Are any types of disputes subject to automatic domestic arbitration?

Chilean law does recognise international arbitration contractual provisions and awards and Chile is a member of the New York Convention and the ICSID Convention.

To recognise an arbitration award, the award must do the following:

  • refer to the payment of money;
  • be final and conclusive;
  • be presented to the Supreme Court of Chile duly legalised or apostilled and translated into Spanish by a court appointed translator;
  • not be contrary to the public policy of Chile; and
  • not affect in any way property located in Chile.

In such case, the Supreme Court will recognise the award without any retrial or re-examination of the merits of the case, under the following circumstances:

  • if there is a treaty between Chile and the country where the foreign award was rendered with respect to the enforcement of foreign awards, the provisions of such treaty shall be applied;
  • if there is no treaty, the foreign award will be enforced if there is reciprocity as to the enforcement of foreign awards;
  • if it can be proved that there is no reciprocity, the foreign award cannot be enforced; and
  • if reciprocity cannot be proved, the foreign award will be enforced if it has not been rendered by default within the meaning of Chilean law.

There are some types of disputes not arbitrable, but they are not related to project finance transactions. Disputes subject to automatic domestic arbitration are mainly related to those among partners and shareholders.

Law governing agreements

Which jurisdiction’s law typically governs project agreements? Which jurisdiction’s law typically governs financing agreements? Which matters are governed by domestic law?

Project agreements are usually governed by local law, with the exception of engineering, procurement and construction (EPC) contracts, which sometimes are governed by New York law.

Credit agreements are usually governed by New York law when foreign banks are involved, but governed by local law when only local banks participate. Security agreements related to collateral located in Chile and promissory notes are always governed by local law.

Submission to foreign jurisdiction

Is a submission to a foreign jurisdiction and a waiver of immunity effective and enforceable?

The submission to a foreign jurisdiction that has a connection with the parties to the contract and a waiver of immunity are effective, but in the case of state-owned companies an authorisation by the President of Chile is required.